Thailand's government has released eight proposals that aim to underpin the digital economy. But will they deter private investment?

The transformation of Thailand's digital economy moved a step further last week, following cabinet approval of eight draft bills. By opening up new sources of telecoms revenue and expanding internet access, the proposals aim to unlock economic growth for Thailand. But they will also see the government take much more direct control of the country's digital strategy, and of the funds raised from telecoms fees and auctions. Of the eight proposals approved by the cabinet, some address challenges such as cyber security and consumer rights, while others tackle organisational and regulatory changes. The Ministry of Information and Communications Technology (ICT), for example, will become the Ministry of Digital Economy and Society. There would also be restructuring at TOT (a state-owned telecoms company that provides mobile and wireless broadband services) and CAT Telecom (another state-run organisation that runs Thailand's international infrastructure, including gateways, satellites and submarine cable networks).

The most significant organisational change would see the National Broadcasting and Telecommunications Commission (NBTC) cease operating as an independent regulator. Instead, it will come under the scrutiny of a new Digital Economy Policy Committee, which will be responsible for setting guidelines and policy under the digital economy framework. This new committee will be chaired by the prime minister, Prayut Chan-o-cha, while the deputy prime minister will supervise economic affairs as vice chairman.

The NBTC would still be responsible for allocating spectrum―4G 900-mhz and 1,800-mhz auctions are planned for this July―and overseeing issues around competition in the telecoms and broadcasting sectors. But the government would take over the management of spectrum auction funds, which would go into a Digital Economy Fund. The NBTC will also be required to allocate 50% of its licence fees to the fund, supplemented by government seed money and donations.

The fund would be used to upgrade the country's telecoms infrastructure, granting money to public and private entities looking to invest in infrastructure upgrades and innovation. Its spending would be overseen by a committee, chaired by Mr Chan-o-cha, which would decide the criteria by which funding should be allocated. Another committee, staffed by finance and legal experts, would evaluate the fund's performance.

Yet more financing for the changes would come from creating a national holding company responsible for owning and operating all of Thailand's fibre and tower assets. That company would manage a national broadband "backbone", allowing it to generate revenue by renting the assets to private companies. In addition, the government has in the past proposed adding value-added tax to payments for mobile apps.

Safety first

Other proposals passed by the cabinet would set up a new agency to promote the digital economy, and make sure its economic benefits are clear. Several more are aimed at protecting personal information, preventing computer crime and tackling cybersecurity. A new Cyber Security Commission, once again headed by the prime minister, would require telecoms operators to hand over a range of digital information, dispensing with the current need for a court order.

A computer crime bill aims to protect intellectual property and copyright, partly through new powers to block websites that are guilty of piracy. An electronic transactions bill, meanwhile, would set up yet another agency to encourage online transactions, partly by developing soft infrastructure and partly through measures to increase consumer confidence.

Government control
Thailand's government already has substantial involvement in its telecoms sector. The fixed-line market is dominated by state-owned TOT and CAT, for example, while the "Smart Thailand" initiative has established nearly 400,000 public Wi-Fi access points around the country. The proposals, which follow last May's military coup, will see this influence expand still further, however, bringing some uncertainty for private companies.

That is worrying, because Thailand certainly needs funds to meet its burgeoning demand for the internet. The Economist Intelligence Unit expects internet penetration to near-double over the next five years, from around 36 users per 1,000 people in 2014. Nevertheless, the country continues to lag behind regional rivals such as Singapore, Malaysia or Vietnam, and investment is needed to plug the gap. These latest government proposals may help to bolster state investment, but their effect on private investment, particularly the rollout of mobile broadband, will only become clearer as July's 4G auctions approach.